Natural gas processor and distributor
MarkWest Energy Partners LP
) reported second-quarter 2014 earnings - excluding mark-to-market
derivative activity, compensation expense and asset sale
adjustments - of 19 cents per unit, in-line with the Zacks
Consensus Estimate. Meanwhile, the bottom line improved from the
year-ago adjusted profit of 8 cents per unit. Significant
improvement in natural gas processing volumes in the Marcellus and
Southwest regions favored the results.
Revenues of $518.4 million failed to meet the Zacks Consensus
Estimate of $532 million. The top line, however, was up
approximately 25% from the second quarter of 2013.
Quarterly Cash Distribution
On Jul 24, 2014, MarkWest Energy raised its second-quarter 2014
cash distribution by 1.2% sequentially and 4.8% year over year to
88 cents per unit ($3.52 per unit annualized). Also, the
distribution will be paid on Aug 14.
Distributable Cash Flow
During the reported quarter, MarkWest Energy generated
distributable cash flow (DCF) - an indicator of cash paid out for
distribution to unitholders - of $161.7 million, exhibiting a 26%
rise from the prior-year quarter level of $128.4 million, providing
1.04x distribution coverage.
Business Units Performance
With regard to business units, the Southwest segment's operating
income increased 11.2% from the year-ago level to $83.2 million.
The results reflect higher throughput and processing volumes in the
East Texas and Western Oklahoma regions.
The segment's operating profit of $20.1 million was down 14.8% from
last-year quarter's $23.6 million owing to lower fractionation
This segment (the partnership's Marcellus Shale joint venture)
reported a profit of $110.3 million, up 36.5% from $80.8 million in
the year-earlier quarter. A significant improvement in natural gas
processing volume aided the upside.
Operating income from MarkWest Energy's newest segment, Utica, was
$6.6 million against a loss of $1.7 million in second-quarter 2013.
Higher throughput and processing volumes led to the improvement.
The partnership reported operating expenses of roughly $462.7
million, reflecting a significant increase of 68.2% from $275.1
million reported in the year-earlier quarter.
Capital Expenditure & Balance Sheet
During the quarter under review, MarkWest Energy spent
approximately $728.2 million capital, reflecting a decrease from
$803.5 million a year ago. The partnership also declared that it
had roughly $74 million of cash and cash equivalents in its wholly
owned subsidiaries. Total outstanding debt stood at approximately
$3.5 billion, representing a debt-to-capitalization ratio of about
Zacks Rank & Other Stocks to Consider
MarkWest Energy currently has a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months.
Meanwhile, one can look at better-ranked players in the same
industry like Atlas Pipeline Partners LP (
), Delek Logistics Partners LP (
) and Kinder Morgan Management LLC (
). All the players carry a Zacks Rank #2 (Buy).
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